It is hard to believe that just one month ago the indexes were flirting with making new lows, and now, they are ready to break through the primary down trend.
Everything about this move up has been just right–look at the volume, for example.
Nasdaq volume has been especially interesting. As I mentioned a few weeks back, it had been punished the most and therefore stood a good chance of rallying the most. The tech index has indeed rallied, right to the bottom of its primary downtrend line.
Technically, since the indexes are still trading beneath their 200 day moving averages, they are still in a bear market. I guess, too, that until the downtrend line is broken, that the indexes are still in a downtrend. It seems like splitting hairs, at this point.
To me, it all seems surreal. I’m left feeling that I’m not sure if its worth it to ever be net short again, for more than just a trade or two. The Fed has made it clear that the market is not allowed to correct, and stocks must always stay over-valued. Companies that have made decisions which should have bankrupted them are aided and abetted ensuring their survival. It seems to me that it will be easier to develop strategies that buy extreme weakness and capitulation, rather than trying to get short early enough and stay short long enough to see real profits.
I dunno, all the RSIs are above 70, all the SloStokes are above 80, and look where the MACDs are. First glance tells me the indicies are ready to hit the ceilings and bounce down. Back down to retest 11750, 1275, and the 2200 line over the next month. When things look bleak, the Govt handouts kick in, everyone has walking around money and happy horseshit is the toast of the town. Markets coast through the summer.
At some point I will make a big bear bet in August/September as I think things will turn South and get ugly……….baby seal clubbing ugly.
I read somewhere that crashes and significant downturns happen most often in the fall as it is human nauture to bring the crops in from the fields and take the fruit off the trees at that time. And that making money safe for the impending winter is just a natural extension of that thought.
Of course this is if one lives in the northern hemsiphere. I get my California Grapes for my wine in September and my Chilean Grapes are due any day now.
Treepart, I completely agree with your first paragraph. I feel the same way. However, it has only made me poor-er to try and second guess the technicals while considering fundamentals. Had I only focused on the technicals, to the exclusion of all else, I would be doing much better right now.
Interesting observations about seasonality. I believe Adam posted something similar to that, some research, recently.
I have a hard time using the Dow for tech analysis after they put in BOA. So if relying on SPY, we still have not broken out. Perhaps today, should be a good fight whichever way it may go.